Markets see rupee gaining this week on NRI inflows

The rupee, which plunged to a record low of 62.03 to a US dollar on Friday, is likely to claw back to the 61 level this week on more capital inflows from overseas, according to analysts and treasury heads of banks.

"The RBI steps announced last week will start bearing the fruit this week as more NRI remittances are likely to flow in. The rupee is likely to trade in the 60.50-61.40 range this week," IDBI Bank treasurer NS Venkatesh told PTI.
India Forex Advisors' Abhishek Goenka said: "On Friday, the stock market plunged by 4%, but the rupee depreciated by only 30-40 paise due to some appreciation pressure. This week we may see a recovery because of the RBI measures."

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Rupee hits new low vs dollar, Sensex tanks again; investors keep their fingers crossed

The central bank last Wednesday announced more measures to lure NRI deposits to boost capital inflows. The market, since May 22, has seen a whopping USD 11.4 billion being pulled out by FIIs, mostly from the debt market.
However, no banks have so far announced any increases in NRI deposit rates, which are already in the range of 10.25- 10.50% since last December when RBI deregulated NRI deposit rates.
The rupee fell to an intra-day historic low of 62.03 on Friday after RBI on August 14 announced more steps to restrict forex outflows and gold imports.
The rupee closed the week at 61.51, but there was bloodbath on the stock markets which shed more than 4% on capital control worries, coupled with an earlier-than- expected end to the US bond purchase programmes, on solid growth numbers from the Western economies.
The RBI steps included curbs on domestic firms investing abroad and on outward remittances by individuals which sparked fears of a throwback to the 1991 era of capital control.
The central bank also reduced the limit for overseas direct investment (ODI) by domestic companies, other than oil PSUs, under the automatic route from 400% of net worth to 100%.
The RBI steps spooked investors as they thought that the government may move to a capital-control regime.
"Had the US jobs data would not be better, we would have seen a measurable impact of the RBI steps announced on Wednesday on the rupee," said Harihar Krishnamoorthy, treasurer at FirstRand Bank India.
Krishnamoorthy further said the fundamentals of the domestic economy have not deteriorated since the beginning of the fiscal, but sometimes sentiment overpower fundamentals.
Although the government as well as RBI last Friday claimed that they were not considering any capital-control regime, it did not either help the rupee or the markets, which saw investors losing more than Rs. 2 lakh crore in a single day.
NAME- RAJ GAURAV
     PGDM 1 SEM

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Tata Motors rides to lifetime high; Deutsche Bank upgrades stock to ‘buy’

By ECONOMICTIMES.COM | 4 Oct, 2013, 10.43AM IST

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READ MORE ON » The View | Tata Motors stock | Tata Motors sales | Tata Motors Ltd | Tata Motors | Rupee | Jaguar

Analysts at top global brokerage firms have largely maintained their ‘BUY’ rating on Tata Motors citing improvement in global macros and robust sales from its UK-s

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NEW DELHI: Tata Motors LtdBSE 4.41 % rallied as much as 5.7 per cent in morning trade on Friday to hit its lifetime high of Rs 364.70 on the Bombay stock Exchange. Tracking the momentum, the stock has also crossed Rs 1 lakh crore market cap mark.

At 10:00 a.m.; Tata MotorsBSE 4.41 % pared some of the morning gains and was trading 4.6 per cent higher at Rs 360.70. It has hit a low of Rs 344.10 and a lifetime high of Rs 364.70.

The stock has been in an uptrend so far in the year 2013, supported by robust sales from its UK subsidiary. Shares have rallied a little over 10 per cent as compared to 0.58 fall in the BSE Auto index, as of data collected on 3 October.

Analysts at top global brokerage firms have largely maintained their 'BUY' rating on Tata Motors citing improvement in global macros and robust sales from its UK-subsidiary.

Analysts are of the view that Tata Motors is likely to benefit from strong volume growth at its Jaguar Land River unit, especially in China, which should offset declining sales in its domestic market.

Out of five brokerages which maintain their positive bias on the stock, atleast two of them see the stock crossing 400 levels in next 12-months.

After Goldman Sachs, the recent one to recommend Rs 400+ target price for the global auto giant is Deutsche Bank. The global investment bank has also upgraded the stock to 'buy' with a target price of Rs 400.

A 25 per cent increase in valuation, in line with the expansion in valuation multiples for automotive peers reflecting the improvement in global macro. China and the US, which account for 45% of Jaguar LandRover's volumes, have been particularly robust.

The global investment bank says that our target price implies FY15E EV/EBITDA of 7.5x for India business and 3.8x for JLR. The valuation for JLR is in line with BMW (3.5x CY14E), adjusting for differences in R&D accounting.

Deutsche China economist Jun Ma is increasingly constructive on China GDP which should help JLR to post better volumes in near future. He projects 8.6%/8.2% GDP growth for CY14E/CY15E.

"For JLR, we forecast FY14E/FY15E/FY16E volumes at 420K/462K/538K, implying a three-year CAGR of 13%. YTD, JLR volumes have grown 17%, driven by the US (20%) and China (22%)," added the Deutsche Bank report.

Most analysts remain positive on Tata Motors, as they expect volumes to remain healthy on the JLR front and weak rupee should be able to aid margins. However, the domestic business is likely to remain under some nit of pressure.

Deutsche Bank expects TAMO (parent) to generate an EBITDA of Rs 47 bn in FY16E, which would be in line with its previous peak in FY11. While the car and UV businesses are likely to remain under pressure, we expect a revival for CVs in FY15E, said the global investment bank.

nagesh dubey

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Asian shares slip on growing fears over US debt limit

 

Asian shares fell on Friday as a budget deadlock in Washington showed no signs of ending, with investors growing nervous that the stalemate will trigger a damaging debt default.

As the stand-off approaches its fourth day, optimism that Republicans and Democrats would find an early solution to the crisis is giving way to fears over the potentially devastating impact of a default on the world economy.
Tokyo fell 0.96%, Hong Kong slipped 0.83%, Sydney lost 0.44% and Seoul gave up 0.65%. Shanghai was closed for a public holiday.
With both sides unwilling to give ground - Democrats refuse to cede to Republican demands that a budget deal be linked to cuts to President Barack Obama's healthcare bill - investors are increasingly worried about how long the crisis will drag on.
While there are concerns about the US economy, the major worry is that politicians will not agree on raising the country's borrowing limit, which is hit on October 17.
Failure to increase the debt limit will see Washington run out of cash and unable to pay its bills or service its debt obligations.
Obama on Thursday demanded an end to the row, which he described as a reckless "farce", as he looked to pressure Republicans to climb down.
His comments came after White House talks between Obama and congressional leaders made no progress.
International Monetary Fund chief Christine Lagarde warned that failure to raise the debt ceiling could wreak havoc on the global economy, while the treasury department said a default could be "catastrophic" and could cause a recession as bad as that created by the global financial crisis.
"Creeping worries about the US debt ceiling are starting to un-nerve investors," Mike Jones, a currency strategist at the Bank of New Zealand in Wellington, told Dow Jones Newswires.
Currency traders sold the dollar, sending it down to 97.13 yen from 97.27 yen in New York late Thursday, while the euro rose to $1.3625 from $1.3618. The euro bought 132.37 yen compared with 132.49 yen.
On Wall Street, the Dow slipped 0.90%, the S&P 500 also lost 0.90% and the Nasdaq gave up 1.07%.
Adding to selling pressure were figures showing growth in the US service sector, a key driver of the economy, slowed in September.
Oil prices fell, with New York's main contract, West Texas Intermediate for delivery in November down nine cents at $103.22 while Brent North Sea crude for November eased 20 cents to $108.80.
Gold cost $1,316.14 at 02:10am GMT compared with $1,305.52 on Thursday.
NAME- SHYAM KISHOR SINGH
               PGDM 1 SEM

Rupee down 20 paise against dollar in early trade:

The rupee weakened by 20 paise to 61.93 against the dollar in early trade today on the Interbank Foreign Exchange market.

Fresh demand for the US currency from importers put pressure on the rupee, but a higher opening in the domestic equity market and dollar's weakness against other currencies overseas, as a budget deadlock in Washington showed no signs of ending, capped the fall, dealers said.

The rupee had appreciated by 73 paise to close at an almost seven-week high of 61.73 against the dollar in the previous session as the US currency weakened globally.

Meanwhile, the BSE benchmark Sensex rose by 60.89 points, or 0.31%, to 19,962.96 in early trade today

ANAND

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Rupee down 20 paise against dollar in early trade:

The rupee weakened by 20 paise to 61.93 against the dollar in early trade today on the Interbank Foreign Exchange market.

Fresh demand for the US currency from importers put pressure on the rupee, but a higher opening in the domestic equity market and dollar's weakness against other currencies overseas, as a budget deadlock in Washington showed no signs of ending, capped the fall, dealers said.

The rupee had appreciated by 73 paise to close at an almost seven-week high of 61.73 against the dollar in the previous session as the US currency weakened globally.

Meanwhile, the BSE benchmark Sensex rose by 60.89 points, or 0.31%, to 19,962.96 in early trade today

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Global stocks, dollar fall as budget standoff drags on

Stock markets worldwide lost ground on Thursday and the dollar hit an eight-month low as worries grew that the budget standoff in Washington would drag on and become intertwined with the looming and more complex fight over the need to raise the US borrowing limit.

Major US stock indexes fell about 1 per cent as the partial US government shutdown entered a third day and after President Barack Obama, in a speech, maintained his defiant tone by reiterating that he would not meet Republican demands to scroll back provisions of his healthcare reform in exchange for operating the government.

Wall Street briefly extended losses, and the dollar dropped against the euro and yen on reports that gunshots were fired at US Capitol, but the moves were reversed after news that the shots were fired outside the Capitol. US Capitol police said at about 1900 GMT that a lockdown of the US Capitol had been lifted.

Analysts expect investor patience to run out if the shutdown lasts more than about a week as the debt ceiling deadline approaches. US Treasury Secretary Jack Lew has said the United States will exhaust its $16.7 trillion borrowing authority no later than October 17.

Failure to raise the debt limit could damage not only the United States but the rest of the global economy, International Monetary Fund chief Christine Lagarde said. Concerns about a US default have driven up the cost to insure Treasuries, while US one-month Treasury bill rates hit their highest level since November.
(Read: Raising US debt limit crucial for global economy: IMF)

"What's happened in Washington? Nothing. When people are uncertain about what's going to happen, they sell first and ask questions later," said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.

"I think the feeling on Tuesday was, 'OK, the government's shut down, but they're going to do something in a day or two.' Now we're in day three and people are getting both a little concerned and annoyed."

MSCI's world equity index, which tracks shares in 45 countries, fell 0.3 per cent to 383.02 points. It has lost more than 2 per cent since its recent high on September 19.

The Dow Jones industrial average fell 136.73 points, or 0.90 per cent, to end at 14,996.41.

The Standard & Poor's 500 finished 15.23 points, or 0.90 per cent, lower at 1,678.64.

The Nasdaq Composite lost 40.68 points, or 1.07 per cent, to settle at for the day.

Stocks and Treasury yields bounced off the day's lows after reports that House of Representatives Speaker John Boehner said he was determined to prevent a government default.

A spokesman for Boehner, the top Republican, said he has always said the country will not default on its debt, but that there are not enough votes in the chamber to pass a debt limit hike without added provisions.

Market volatility could increase if the deadlock continues as concerns about the economic impact increase. Goldman Sachs estimated a short-term shutdown would slow US economic growth by about 0.2 percentage point, while a weeks-long disruption could weigh more heavily - 0.4 percentage point - as furloughed workers scale back personal spending.

The dollar fell 0.2 per cent against a basket of currencies, having touched an eight-month low of 79.627, on views that the shutdown diminishes the chances of the Federal Reserve will reduce its monetary stimulus this year.

The euro firmed 0.4 per cent to $1.3624, after hitting its highest level in eight months, helped by solid euro zone data. Growth in services companies, comprising the vast bulk of the euro zone's private sector, increased in September at the fastest pace since June 2011 while retail sales rose much more than expected in August.

European shares dropped 0.4 per cent to close at 1,242.18 points.

US default risk

Treasury debt prices rose and yields eased as investors bought US government debt, still seen as the most viable safe-haven investment. US benchmark 10-year Treasury notes were up 3/32 in price with a yield 2.608 per cent.

The cost to insure US government debt, however, has soared in the credit default swaps market.

Investors would pay about 46,000 euros to insure 10 million euros worth of Treasuries for a year on Thursday, according to Markit. This was the highest premium on one-year US sovereign debt since July 2011 during the first debt ceiling showdown between Obama and top Republican lawmakers.

Interest rates on Treasury bills that will come due between the debt ceiling deadline and the end of October also rose on default worries. The rate on the T-bill issue due on October 31 touched 0.17 per cent, the highest level since November. This compared with the 0.03 per cent on the T-bill due the following week.

US data earlier showed the number of Americans filing new claims for jobless benefits edged up last week, while growth in the US services sector cooled last month.

The Labor Department on Thursday said the government's employment report for September will not be released as scheduled on Friday due to the shutdown; a new release date had not yet been set.

Spot gold traded little changed $1,316 an ounce as investors booked profits after the previous session's gains. Gold rose 2.2 per cent on Wednesday, posting the biggest daily gain in two weeks.

Brent crude gave up early gains sparked by strong data from China. Activity in China's services sector expanded at the fastest pace in six months in September as demand grew, cementing a modest pick-up in the world's second-largest economy.

Brent crude was down 19 cents to settle at $109.00 a barrel. US oil fell 79 cents to settle at $103.31 a barrel.

                             By
Shah Mohammad Abdul Qadir       
                     PGDM-1st Sem

Slowing economy may force Chidambaram to wield budget knife

New Delhi: The finance minister may have to slice at least 200 billion rupees from government spending to prevent a budget blow-out, which could threaten to send the country's credit rating into "junk" status, two ministry officials said.

P. Chidambaram will make a final decision on whether to go ahead with the cuts at the end of October, when he gets an update on revenue collections, the officials, who have direct knowledge of the process, said.

If he goes ahead with cuts, the minister would likely focus on areas of discretionary spending but keep programmes, such as food subsidies, in place as state and national elections near, these officials said.

Chidambaram, who last year oversaw cuts worth over 1 trillion rupees, is aiming to prevent the budget for the fiscal year to March 2014 from stretching beyond a deficit target of 4.8 percent of GDP.

A budget blow-out would be a concern for credit ratings agencies. India has the lowest investment grade rating and Standard & Poor's maintains a negative outlook. A cut to "junk" status would raise its borrowing costs and could trigger further panic on financial markets after the rupee fell as much as 20 percent this year and the economy posted its weakest growth in years.

The officials said that Chidambaram had briefed government officials on September 17 on the need for prudent spending, even though in public he has said that the budget remains on target.

"With oil subsidies up by about 300 billion rupees, the government may have to cut expenditure by around 200 billion rupees in addition to usual savings of around 300 billion rupees at the end of the year," said a senior finance ministry official.

Doubts that economic growth and tax receipts will match budget assumptions, and slow government asset sales also pointed to the need for spending cuts, the officials said.

However, a spokesman for the ministry said there were no plans for cuts at present and that "departments have been instructed to manage within the allocated funds".

MUNTAZIR ALAM
PGDM 1ST